38-) Assume an international regime of fixed exchange rates. When countries do not want to engage in direct intervention, countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________ their currency.

Select one:

a. surplus, revaluing; deficit, devaluing

b. surplus, devaluing; deficit, revaluing

c. deficit, devaluing; surplus, devaluing

d. deficit, revaluing; surplus, revaluing

39-)

An MNE has a contract for a relatively predictable long-term inflow of Japanese yen that the firm chooses to hedge by seeking out potential suppliers in Japan. This hedging strategy is referred to as:

Select one:

a. a natural hedge.

b. matching.

c. currency-switching.

d. diversification.

40-)

Assume the current U.S. dollar-yen spot rate is 90 /$. Further, the current nominal 180-day rate of return in Japan is 1% and 2% in the United States. What is the approximate forward exchange rate for 180 days?

Select one:

a. 89.55/$

b. 90.89/$

c. 90.45/$

d. 89.12/$